5 scams criminals use to steal your money, and effective ways to protect yourself

According to the French media service, Connexion, there was a 400% increase in online shopping scams when France first went into lockdown in 2020.

The nation’s postal service, La Poste, was so concerned about the rise in fraud that it launched an online and social media campaign, later warning customers to be on their guard against fraudsters.

As people across Europe increasingly started to use online shopping and bank accounts in the wake of coronavirus, criminals saw an opportunity to cash in. An article in ITPro reports that one survey carried out in 2020 found 47% of consumers in the UK, Germany, France, Spain, and Italy opened new online shopping accounts, with 31% opening online bank accounts.

This dovetails into the biggest challenge everyone in the EU is now facing with fraud: how sophisticated criminals have become. Visit the European Securities and Markets Authority (ESMA) website and you’ll see warnings that even its logo and letterheads are being used by fraudsters to promote scams.

So how can you guard against fraudsters and online scams? Discover five ways criminals may try to approach you and how you may be able to spot a scam before falling victim.

1. Beware of search engines – they can be a criminal’s playground

Search engines can provide a fertile hunting ground for criminals looking to target your money using paid-for adverts.

In March 2020, the Guardian reported that 200 fake “traders” were caught in the Ukraine using fake ads on Facebook. To add credibility to their scam, they featured trusted celebrities who had no idea their names were being used.

It can be difficult to spot bogus adverts on comparison sites, and the sham investment companies behind them, as criminals pay to appear at the top of search results.

Be wary of adverts offering returns that are slightly higher than standard rates, as these can be deliberate ploys to tempt you without setting off alarm bells.

If an advert offers “best bonds” and/or “best fixed-rate bonds”, always be careful.

2. Criminals set up bogus investment firms

Companies are sometimes set up by criminals that imitate a genuine investment firm. The “cloned” firm either offers products that do not exist, or will invest your money in high-risk funds that pay the fraudsters handsomely while potentially exposing your investment to heavy losses.

In 2020, the UK’s Financial Conduct Authority’s (FCA) warning list contained 1,184 companies that the regulator believed may be running investment scams – double the 573 it had listed in 2019.

Fraudsters will make the company seem genuine by:

• Providing a number that matches a legitimate firm on the FCA register, and use the same address in emails and correspondence

• Providing realistic-looking fact sheets or prospectuses

• Following compliance procedures similar to reputable companies. This means they will ask for ID and personal documents, so always check whether the company is on an official warning list. Also, visit the website of the legitimate firm, or make contact with it, to check whether the adviser you are speaking with represents the firm.

3. Criminals impersonate officials, but there are ways you may spot them

Between January and June 2020 almost 15,000 cases of impersonation fraud were reported to UK Finance, the organisation that represents banks and the finance industry. This is an increase of 84% on the previous year.

While criminals can be extremely plausible, they usually employ “tricks” to panic you into action – but which also provide red flags for you to look out for. These include:

• Urgency – fraudsters claim you have a limited time to respond and may threaten you with fines or other negative consequences.

• Emotion – the message or caller will aim to create panic, fear, hope or curiosity. Beware of threatening language or false claims.

• Scarcity – like urgency, criminals will claim their offer is in short supply.

• Current events – criminals exploit news stories or major events and could send a message you were expecting. Always check the validity of a message or call.  

4. Beware of emails and texts claiming to be from your bank

Emails or texts claiming to be from your bank may be forms of “phishing”, designed to capture information that is potentially used to access your bank or investment accounts.

Always treat emails and texts with caution, as clicking on a link could take you to a bogus website that allows the fraudsters to steal personal and financial details.

5. Criminals are likely to target your pension

As pensions can be worth a lot of money, they attract ruthless criminals.

According to International Investment, scams by rogue sales people posing as financial advisers have cost a number of expats in Spain their pensions. In one case, a woman lost her entire €400,000 (£345,000) pension pot, forcing her to move back to England and live in a caravan.

The victim had been advised to invest in a qualifying recognised overseas pension scheme (QROPS).

If you are discussing a QROPS be extremely careful, and ensure you understand exactly where your money will be invested, and the risks involved. While pension transfers can, in certain situations, be the right thing to do, always ensure you’re speaking to a legitimate financial professional before taking action.

A common pension scam is when you are offered access to the funds in your pension before you have reached the “minimum pension age”. This is the earliest age you can retire: in France it’s 62, in Germany it’s 63, in the Netherlands it’s 67, and in Belgium it’s 65. In the UK it’s 55.

Usually referred to as “pension liberation” or “pension loans”, scammers claim you can borrow money from your pension pot. These schemes should be avoided as drawing on your pension pot before minimum retirement age could result in a hefty tax bill and heavy potential losses.

Get in touch

If you would like to discuss investments or financial strategies with a company you know you can trust or would like a second opinion on any advice you are receiving, contact us at info@blackswancapital.eu and we’ll be happy to help.

Please note:

This article is for information only. Please do not act based on anything you might read in this article.